Expertise Value Added in the Real Estate Market

Abstract

We consider the effect of expertise on economic transactions, with a particular focus on the real estate market. We show that even as listing information becomes increasingly accessible on real estate aggregation websites, realtor expertise remains important in securing a desirable sale price. One main channel for the effects of such expertise is improving information dissemination to potential buyers through higher quality listings. Using listing photos and remarks as measures of quality, we find that realtor activity is correlated with significantly higher quality listings. We then measure the price impact of these measures of quality and find that, even after controlling for a large spectrum of house characteristics, listing quality is correlated with higher sale prices.

Keywords: expertise, transaction, real estate, specialization, value

JEL Classification: D8, L1, L8, R2, R3